Filene’s Basement Project on Hold in Boston

Retail Ventures Inc. (Columbus, Ohio) is being forced to delay the reopening of its Filene’s Basement store in downtown Boston.

The developer of the Boston’s Downtown Crossing redevelopment project – home of the original, flagship Filene’s Basement outlet – said the project has been put on hold indefinitely until costs can be reduced and financing secured. The store, the biggest and most profitable store for the chain, has been closed since last fall because the building housing it is being redeveloped as a massive mixed-use retail, office and residential project.

In September, Retail Ventures said the project was behind schedule and set for a fourth-quarter 2009 opening at best, and a first-quarter 2010 debut at worst. The project originally had been scheduled to open in the spring of 2009.

Developer John Hynes said that the project has been difficult to sell to the out-of-town banks he’s trying to convince to fund the development. Hynes hasn’t been able to close a $400 million construction loan for the $700 million project. The Boston Business Journal reported last month that Hynes had lined up six banks, including the Bank of Ireland and Bank of America, and was about $50 million shy of closing the construction loan, which hasn’t been signed.

Financing problems are prompting a move to cut costs, while Hynes said he is considering a redesign despite the fact that 75 percent of the retail space and 25 percent of the office space is leased.

“We are really (taking) a time out,” Hynes said. “We’re $170 million in the hole. We can’t walk away. … It’s currently a $700 million project. The only way we’re going to get this project off the ground is to reduce the cost.”

In 2006, the store accounted for 13 percent of the Filene’s Basement chain’s annual sales. Its absence put a $5.8 million hole in the company’s sales for the year ended Feb. 2, 2008.